ou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five$-$year period. His annual pay raises are determined by his division$$s return on investment $($ROI$),$ which has exceeded $19\%$ each of the last three years. He computed the following cost and revenue estimates for each product:

Product A Product B

Initial investment:

Cost of equipment $($zero salvage value$)$ $ $180,000$ $ $390,000$

Annual revenues and costs:

Sales revenues $ $270,000$ $ $360,000$

Variable expenses $ $130,000$ $ $180,000$

Depreciation expense $ $44,000$ $ $86,000$

Fixed out$-$of$-$pocket operating costs $ $80,000$ $ $60,000$

The company$$s discount rate is $16\%.$

Click here to view Exhibit $14$B$-1$ and Exhibit $14$B$-2,$ to determine the appropriate discount factor$($s$)$ using tables.

Calculate each product$$s net present value.

Calculate each product$$s internal rate of return.